SBI planning to invoke personal guarantees of Bajaj Hindusthan promoters

State Bank of India, the lead bank of Bajaj Hindusthan Sugar, is planning to invoke the personal guarantees of the promoters after the company was sent for debt resolution to the National Company Law Tribunal (NCLT) Allahabad bench. NCLT is yet to admit SBI-led banks petition to start corporate insolvency resolution procees for Bajaj Hindusthan.

The company owes Rs 4,771 crore to Indian banks and has already availed two debt restructuring schemes, leading to massive haircuts taken by lenders. “We are taking steps to invoke the personal guarantees of the promoters in accordance with the Supreme Court’s directions in this regard in May this year,” said a banker, asking not to be quoted.

A Bajaj Hindusthan spokesperson declined to comment. SBI did not comment on the matter related to a particular account.

The company was sent for debt restructuring early this month after the company failed to fulfil certain requirements of the earlier debt restructuring plans. The debt was classified as a non-performing asset with retrospective effect from June 2017, the SBI petition to the NCLT said.

In its petition, SBI said the cause of action continued to arise when the banks required the company to maintain financial discipline, but it did not comply with the terms of settlement. The cause of action also accrued to SBI on each and every day when the company acknowledged its liability but didn’t pay the dues of the bank, the petition said.

Bajaj Hindusthan, one of the largest sugar companies, has 14 factories with an overall capacity of crushing 136,000 tonnes of sugarcane a day.

It has six distilleries with the capacity to produce 800 kilo litres of industrial alcohol a day.

For FY22, the company reported revenues of Rs 5,569 crore and a loss of Rs 218 crore.

Earlier, the company said in a stock market statement that its optionally convertible debentures worth Rs 3,483.25 crore, issued to the Joint Lenders’ Forum (JLF) in accordance with the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) for converting part of the unsustainable debt into equity, provides the holder the option to exercise the right.

The company has not taken the provision on coupon rate interest on such OCDs and has not considered YTM (yield to maturity) after March this year. The management is of the view that the coupon rate interest and YTM will be treated in accordance with the financial restructuring plan submitted by the company to the lenders. But the auditors have drawn qualifications for non-provision of YTM premium up to June 30, 2022, as well as coupon interest on OCDs for the quarter ended on June 30, this year.